MARPOL, Magic Pipes and Whistleblowers - The Do’s and Don’ts for Effective Environmental Compliance.
George M. Chalos, Esq.
Chalos & Co.
Since the tragic events of September 11th, the United States Coast Guard has undertaken a comprehensive program of boarding vessels calling U.S. ports. As a result of the heightened security measures, there has been a significant increase in the scrutiny to which a vessel, her logs, and her records, are being inspected. Such scrutiny, rightly or wrongly, continues to result in numerous vessel and crew detentions, as well as massive civil and criminal charges against vessel Owners, Operators, Managers, Officers and crew.
Specifically, the U.S. Coast Guard established an Oily Water Separator Task Force to examine a wide range of issues related to pollution control equipment and its use on vessels in U.S. waters. The Coast Guard and other law enforcement personnel regularly examine the use and functionality of oily water separator systems more carefully than ever before, and have made it clear that they will seek jail sentences for Masters and engineers of ships committing pollution offense, or falsifying records, including but not limited to Oil Record Books (hereinafter “ORB”). The fact that an Owner, Operator and/or their shore-side staff may be located outside the U.S. is no deterrent to dogged prosecution efforts. Quite often, even if no pollution incident has occurred, the Coast Guard and U.S. prosecutors, upon the mere “discovery” of potential by-passing paraphernalia, (such as a flexible hose or suspicious fittings and piping in the engine room), will commence a Grand Jury investigation seeking to prosecute alleged illegal by-passing of the OWS system and/or the presentation of an ORB containing “false entries”.
Document Review During Port State Control Inspection
A document review during a Port State Control inspection will often include an examination of the vessel’s IOPP Certificate, ORB, Incinerator Log, and Shipboard Oil Pollution Emergency Plan (hereinafter “SOPEP”). See 33 C.F.R. § 151.23(a). These documents are often utilized during the inspection of the vessel to ensure the vessel, its documentation and equipment meet all applicable APPS and Annex I requirements.
Oil Record Book (“ORB”)
Since the ORB is supposed to record all shipboard oil transfer, and all bilge water and sludge discharge operations, it is thoroughly inspected. For this reason, the ORB must be filled out in accordance with all applicable regulations, and all internal transfers, as well as all overboard discharges, must be recorded without delay. For example, APPS requires an entry shall be made in the ORB whenever any of the following machinery space operations take place: 1) ballasting or cleaning of fuel oil tanks; 2) discharge of dirty ballast or cleaning water from fuel oil tanks; 3) disposal of oily residues (sludge); and, 4)discharge overboard or disposal otherwise of bilge water that has accumulated in machinery spaces. Entries shall also be made in the ORB whenever any of the following cargo/ballast operations take place on any oil tanker: 1) loading of oil cargo; 2) internal transfer of oil cargo during voyage; 3) unloading of oil cargo; 4) ballasting of cargo tanks and dedicated clean ballast tanks; 5) cleaning of cargo tanks including crude oil washing; 6) discharge of ballast except from segregated ballast tanks; 7) discharge of water from slop tanks; 8) closing of all applicable valves or similar devices after slop tank discharge operations; 9) closing of valves necessary for isolation of dedicated clean ballast tanks from cargo and stripping lines after slop tank discharge operations; and, 10) disposal of residues. See 33 C.F.R. 151.25(e). All such entries “shall be fully recorded without delay in the Oil Record Book so that all the entries in the book appropriate to that operation are completed.” MARPOL, Annex I, Regulation 20(4); 33 C.F.R. §151.25(H). During a Port State Control inspection, the Coast Guard may question the engine room staff to determine if the recent entries in ORB represent actual procedures followed by shipboard personnel. If the Coast Guard discovers any of the following “red flag” entries in the ORB, they will likely call in the Coast Guard Investigative Service (“CGIS”)1 to begin a criminal investigation:
1. An ORB entry where the amount of bilge water or sludge processed exceeds the rated capacity of the pollution prevention equipment that is indicated on the IOPP;
2. ORB entries that utilize the wrong code for the task performed;
3. ORB entries that are not in chronological order;
4. Missing pages in the ORB or entries that are concealed by “White-Out”;
5. Repetitive entries that are indicative of the falsification of ORB activities;
6. If waste oil, sludge, bilge and other tank levels noted during the inspection vary significantly from the last entries in the ORB;2 and,
7. If the recorded quantities of oily bilge water pumped to holding or processed by the OWS directly from the bilge wells does not compare to observed conditions within the machinery space. If the vessel maintains an Incinerator Log, it, too, will likely be inspected by the authorities. If the vessel is utilizing the incinerator to dispose of sludge, the Coast Guard will compare the entries in the Incinerator Log to the corresponding entries in the ORB. If there is a discrepancy between these numbers or if the log indicates that the incinerator is working beyond its rated capacity, suspicions will be raised that the vessel is improperly disposing of sludge. The Coast Guard will also examine the SOPEP to verify that it has been approved by the vessel’s Flag. The Coast Guard will spot check the pollution response equipment listed in the SOPEP and verify that the phone numbers and points of contact listed in the SOPEP are up to date (i.e., National Response Center, local Captain of the Port, or Coast Guard or Sector offices).
Penalties for Violations
Generally, it is well settled U.S. law that in order for a person to be guilty of a crime, the person must act with “criminal intent.” However APPS, like most environmental and public health and welfare criminal statutes, does not require that the government prove that a defendant wrongfully intended to violate the law. Instead, the government need only prove that an actor knowingly committed an act and that act violated an existing law or regulation. For example, the criminal enforcement provision of APPS provides that any person who “knowingly violates” a specific provision of the statute may be guilty of a felony, even if an individual did not know that such conduct was a crime. In addition to criminal fines, if an individual or corporation is found to have violated a provision of APPS or MARPOL, the government can also impose a civil penalty of up to twenty-five thousand dollars ($25,000.00) for each violation. See 33 U.S.C. § 1908(b). APPS places an affirmative duty on the Master, Chief Engineer - or other person in charge - of any vessel subject to APPS to report any “discharge, probable discharge, or presence of oil” while the vessel is within the navigable waters of the United States. APPS places the same duty to report on persons in charge of seaports and oil handling facilities within United States jurisdiction. To ensure compliance with these regulations, the Coast Guard is authorized to inspect any vessel at any U.S. port. If it is determined that a vessel or her crew may have violated pollution prevention laws, its customs clearance will be revoked and the vessel “held-up” until the owner and operator post a surety satisfactory to the Secretary [of the department in which the United States Coast Guard is operating].3 The vessel may also be arrested and sold to satisfy any fine or penalty under APPS. As stated above, APPS applies to every vessel that is operated under the authority of the United States (i.e., “U.S. flagged vessels”). In addition, it is applicable to foreign flagged vessels when these vessels are in the navigable waters of the United States4. This is a critical distinction, since the jurisdiction of the United States to criminally prosecute Owners, Operators and crewmembers of foreign flagged vessels, is strictly limited to acts committed in U.S. navigable waters. Parenthetically, we note that for Owners, Operators, and crewmembers of U.S. flagged vessels there are no such limits on the jurisdiction of the United States to prosecute violations of APPS and MARPOL. Thus, if a U.S. flagged vessel knowingly violates the provisions of APPS or MARPOL anywhere in the world, it can and will be prosecuted by the United States government. In short, it is a class D felony to knowingly violate the provision of APPS. A class D felony is publishable by up to ten (10) years imprisonment, and a fine up to $250,000 for an individual, and up to $500,000 for a corporation, for each violation. A violation of APPS where the individual or corporation did not knowingly violate these sections is punishable by a civil penalty not to exceed $25,000 for each violation.
Other Pollution and Environmental Protection Statutes
In addition to APPS, there are a number of other federal environmental protection statutes that make it a crime to discharge oil or waste in U.S. waters. Specifically, the Clean Water Act, 33 U.S.C. § 1251, et seq. prohibits the unpermitted discharge of any pollutant, including a discharge of oil, by any person into navigable waters of the United States5. A “knowing” violation of the Act is a felony. A “negligent” violation of the Clean Water Act is a misdemeanor. Failure to report a discharge is punishable by imprisonment of up to five (5) years, and a fine of up to $250,000 for an individual, and up to $500,000 for a corporation.
Similarly, the Rivers and Harbors Act of 1899, 33 U.S.C. § 401, et seq., provides that any discharge of refuse of any kind from a vessel into navigable waters of the United States is strictly prohibited. A violation of the Act is a misdemeanor. The courts have taken a broad view of what constitutes “refuse” under the Act, and the Act has been extended to a discharge of oil or petroleum.
A person can be convicted of a misdemeanor violation of the Rivers and Harbors Act based solely upon proof that the person placed a banned substance into navigable waters of the United States. A party can also be found guilty of a felony for conduct that does not directly involve the discharge of oil or waste into U.S. waters. Under 18 U.S.C. § 1001, it is a felony to make a false statement to the U.S. Government. To sustain a conviction for a violation of the Act, the Government must only show: (1) that a statement or concealment was made; (2) the information was false; (3) the information was material to a government investigation or activity; (4) the statement of concealment was made “knowingly and willfully;” and (5) the statement or concealment falls within the executive, legislative or judicial branch jurisdiction. The false statement need not be an affirmative statement, but can also include the concealment of the truth when an individual has a duty to answer. For example, a false statement about, or concealment of, any discharge of oil is a violation. Additionally, the U.S. authorities vigorously prosecute individuals and corporations suspected of tampering with witnesses in connection with an on-going investigations. Under 18 U.S.C. § 1512, anyone who knowingly uses intimidation or physical force, threatens, or corruptly persuades another person, or attempts to do so, or engages in misleading conduct toward another person with the intent to hinder, delay or prevent the communications to a law enforcement officer or a judge of the United States of information relating to the commission, or the possible commission, of a federal offense, shall be fined or imprisoned up to ten (10) years, or both. In situations where two (2) or more persons conspire either to commit an offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, (pursuant to 18 USC § 371), each shall be fined or imprisoned up to five (5) years or both. Recently, the Department of Justice has also been charging crewmembers and vessel owners and operators accused of presenting false records to the government with violations of the Sarbanes-Oxley Act, 18 U.S.C. § 1519.6 This statute is commonly known as the “Enron” statute and was intended to apply to corporate fraud. The significance of utilizing this statute is that it carries a potential jail sentence of 20 years, which is a powerful motivator for someone threatened with prosecution under this statute to turn “state’s evidence’ as the phrase goes. In fact, no vessel Owner, Operator or crewmember has ever been convicted under this statute, although it has been charged in recent Indictments.
Recommendations for Shipboard Personnel on How to Respond to U.S. Authorities Conducting Port State Control Inspections and Prepare for Criminal Investigations
1. Shipboard personnel must, at all times, obey all international and U.S. environmental regulations;
2. All shipboard personnel must be truthful and forthcoming during all port state inspections;
3. If the Port State Control inspection appears to be more than a routine inspection, immediately notify the manager and/or the vessel’s port agent and/or the P&I Club’s local correspondent;
4. Once an investigation commences, do not under any circumstances remove or destroy any documents, computer files, emails, correspondence, piping, flanges, or other potential evidence and do not give or accept any orders to do so;
5. Officers and crewmembers must not attempt to influence other officers and/or crew as to their discussions with the authorities, other than to insist that the officers and crew are honest and forthright with all authorities; and,
6. Seek the advice of competent maritime criminal counsel.
The Fifth Amendment to the U.S. Constitution
The most basic, yet essential, advice any maritime criminal lawyer can give to today’s mariner is: seek the advice of counsel as soon as practical, and always be truthful and forthright in your dealings with the U.S. authorities. It is extremely advisable that if U.S. authorities undertake any onboard investigation, which goes beyond the scope of the ordinary port state control inspection, competent criminal counsel should be engaged to protect the rights of the vessel officers and crew, not to mention her Owner, Operator, Manager, and their shore-side personnel. For example, if a member of the CGIS comes onboard a vessel during a Port State Control Inspection, a criminal investigation has begun and it may be in the crewmember’s best interest to invoke his Fifth Amendment Privilege against self-incrimination.
The Fifth Amendment of the United States Constitution states that:
No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation. The Fifth Amendment Privilege against self-incrimination is not dependent upon the nature of the proceeding in which the testimony is sought. It is applicable wherever the answer might tend to subject one to criminal responsibility and applies in both civil and criminal proceedings. A seaman may also invoke his Fifth Amendment privileges even if there is no U.S. criminal investigation, but rather may subject the seamen to criminal liability outside of the U.S., so long as the seaman can show that the subject of the government’s questions raises “a real danger of being compelled to disclose information that might incriminate him under foreign law,” and second, that there is a “real and substantial fear of foreign prosecution.” Individual crew members should invoke their Fifth Amendment privilege against self-incrimination until competent counsel is engaged and present. In short, once a criminal investigation has commenced and a mariner invokes his own Fifth Amendment privilege, he is not required to speak with the U.S. authorities and/or respond to any of their questions, which may lead to self-incrimination.
Environmental compliance and the U.S. Government’s prosecution of suspected violations are extremely serious matters. For more information on the subject, please feel free to contact George M. Chalos at firstname.lastname@example.org.
3 The Coast Guard, acting on behalf of Homeland Security, in order to release the vessel from any Custom’s hold, has generally been demanding bond security in amounts of $1 million or more. In addition, as part of its investigation, the Coast Guard generally removes from the vessel as potential “material witnesses the entire engine room crew and many times other crew members, as well. Consequently, as part of any security agreement for the vessel’s release, the Coast Guard requires, among other things, the vessel owner and/or operator to house, feed and pay the salaries for any crewmembers so removed for periods ranging from 90-270 days. Depending on the length and breadth of the investigation, such expenses can be substantial.
4 The navigable waters of the United States are: 1) the territorial seas of the United States; 2) internal waters of the United States that are subject to tidal influence; and, 3) internal waters of the United States not subject to tidal influence that are or have been used as highways for substantial interstate or foreign commerce. See 33 C.F.R. §2.36(a). Territorial seas of the United States are the waters, 12 nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline. See 33 C.F.R. §2.22.
5 “Navigable waters of the United States are those waters that are subject to the ebb and flow of the tide and/or are presently used, or have been used in the past, or may be susceptible for use to transport interstate or foreign commerce. A determination of navigability, once made, applies laterally over the entire surface of the waterbody, and is not extinguished by later actions or events which impede or destroy navigable capacity.” See 33 C.F.R. § 329.4.
6 18 U.S.C. §1519 reads: “Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both.”